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Bringing the owners back in: An analysis of a 3-mode interlock network
Stockholm University, Faculty of Social Sciences, Department of Sociology.
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This paper examines the association between ownership and director inter-locks in Swedish big business between 1990-2005. By analyzes of the 3-mode network of owners, firms, and directors, it is showed that ownership and director interlocks are highly associated. Over the 16 years analyzed, up to 47.1% of all multiple director assignments are dependent on owner inter-locks, and the range is 0.307 (2001) to 0.471 (1991). Although still high, the association between ownership and directorship interlocks has decreased during the studied period. This is shown to be due to a decrease in the asso-ciation between ownership interlocks and director interlocks for directors without any CEO positions. For directors with at least one CEO position, the association between the interlock types is stable over the entire period. The findings provide a new understanding of the mechanisms behind the formation of director interlocks. Furthermore, the association between the interlock types suggests that the ownership network may potentially (co-)produce some of the phenomena that have been attributed to the director network. Future analyses of director interlocks have to bring the owners back in.

Keyword [en]
Social network analysis, Director interlocks, Ownership structrures, Corporate governance, 3-mode networks
National Category
Sociology
Research subject
Sociology
Identifiers
URN: urn:nbn:se:su:diva-36773OAI: oai:DiVA.org:su-36773DiVA: diva2:290120
Available from: 2010-01-26 Created: 2010-01-26 Last updated: 2010-02-04Bibliographically approved
In thesis
1. Director Interlocking and Firm Ownership: Longitudinal Studies of 1- and 3-Mode Network Dynamics
Open this publication in new window or tab >>Director Interlocking and Firm Ownership: Longitudinal Studies of 1- and 3-Mode Network Dynamics
2010 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis is based on three empirical studies of the director interlock network among Swedish firms listed on the Stockholm Stock Exchange, focusing on its consequences for firm behavior and its association with ownership structures. Director interlocks are created when directors serve on, and hence interlock, several boards. Director interlocks aggregate to a social network that not only connects most firms into a single component, but are, more essentially, also shown to affect firm behavior. The introductory chapter contains a review of the director interlock research as well as some suggestions for future research directions.

Study I is an examination of the importance of director interlock relations for stock repurchases. Using parametric survival analysis, it is demonstrated that the decision to repurchase stocks is dependent on both the firms’ economic settings and their director interlocks.

Study II examines the network impact on recruitment of new board members in the network of firms, directors, and owners. Using simulations, it is shown that directors with personal contact with a director and/or owner of the recruiting firm have a substantially increased probability of being recruited to the focal board.

Study III examines the association between ownership and director interlocks. Re-analyses of the same network examined in Study II show that multiple director assignments are highly dependent on ownership interlocks.

The three studies exemplify the real-world consequences of board interlocks and field a new understanding of the mechanisms behind their formation. Furthermore, the association between the director and ownership interlocks suggests that the ownership network (co-)produces some of the phenomena that have been attributed to the director network. These results underscore the need for further examination of director interlocks to bring the owners back into the analysis.

Place, publisher, year, edition, pages
Stockholm: Acta Universitatis Stockholmiensis, 2010. 155 p.
Series
Stockholm studies in sociology, ISSN 0491-0885 ; N.S., 41
Keyword
Social network analysis, Director interlocks, Ownership, Corporate governance, 3-mode networks
National Category
Sociology
Research subject
Sociology
Identifiers
urn:nbn:se:su:diva-36774 (URN)978-91-86071-33-2 (ISBN)
Public defence
2010-03-26, Nordenskiöldsalen, Geovetenskapens hus, Svante Arrhenius väg 12, Stockholm, 10:00 (English)
Opponent
Supervisors
Note

At the time of the doctoral defense, the following papers were unpublished and had a status as follows: Paper 2: Manuscript. Paper 3: Manuscript.

Available from: 2010-03-04 Created: 2010-01-26 Last updated: 2012-10-05Bibliographically approved

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